The CTA: Does Everyone Need to File?

The Corporate Transparency Act (CTA) imposes a new federal requirement for many U.S. and foreign companies to disclose ownership information to FinCEN by January 1, 2025. While this filing requirement is broad, not every company needs to file. Determining compliance is critical, as failing to do so can result in penalties of $500 per day. Whether your company is U.S.-based or a foreign entity registered to do business in the U.S., you must determine whether you’re required to file under the CTA.

The 23 Exemptions Under the CTA

The CTA also includes **23 exemptions** that exclude certain companies from filing. These exemptions target entities already subject to significant regulatory oversight or those with specific characteristics that reduce the likelihood of misuse for illicit purposes. However, the exemptions are detailed and require careful analysis to ensure compliance. Simply assuming your company qualifies for an exemption—or defaulting to filing without reviewing the rules—can lead to unnecessary costs or compliance risks.

Here are the **23 exemptions** under the CTA:

1. Securities issuers (registered under the Securities Exchange Act of 1934).
1. Governmental authorities (federal, state, tribal, or local).
1. Banks (under the Federal Deposit Insurance Act)
1. Credit unions (under the Federal Credit Union Act).
1. Bank holding companies.
1. Money services businesses (registered with FinCEN).
1. Brokers or dealers in securities.
1. Securities exchanges or clearing agencies.
1. Other Exchange Act registered entities.
1. Investment companies (under the Investment Company Act of 1940).
1. Investment advisers (registered under the Investment Advisers Act of 1940).
1. Venture capital fund advisers (exempt under the Investment Advisers Act).
1. Insurance companies.
1. State-licensed insurance producers.
1. Commodity Exchange Act registered entities.
1. Accounting firms (registered under Sarbanes-Oxley Act of 2002).
1. Public utilities (regulated by a state or federal agency).
1. Financial market utilities (designated by the Financial Stability Oversight Council).
1. Pooled investment vehicles.
1. Tax-exempt entities (under section 501(c) of the Internal Revenue Code).
1. Entities assisting tax-exempt entities.
1. Large operating companies (more than 20 employees, over $5 million in gross receipts, and a U.S. office).
1. Inactive entities (meeting specific criteria).

Carefully Analyzing Exemptions

Carefully analyzing these exemptions is essential. For example, large operating companies must meet all three criteria to qualify for exemption, while inactive entities must have no active business and meet specific age and ownership requirements.

Evaluating Your Compliance

The CTA’s broad reach means every business—whether small or large, U.S.-based or foreign—must evaluate its compliance obligations. Counsel Club’s platform simplifies this process with a quick test to determine whether you need to file and ensures you file correctly if required. Don’t risk penalties or unnecessary filings—start your compliance journey with confidence.